Year 2016

Drive safely!

Our unique expertise creates the safest premium products and services for the everyday life. As a pioneer in the tyre industry, we want to be the best in everything we do!

We delivered on our promise to grow faster than the market

DEAR READER,

Once again, our organization showed its strength in implementing our chosen strategy in 2016. Our profitability developed in an excellent manner. In Russia, we still had to make some bad debt provisions for a few clients, and their total value slightly exceeded the exceptionally high provisions in 2015. However, we were able to compensate for the bad debt provisions with a competitive product portfolio and excellent work from the sales organization, which also enabled a higher price position. In addition, productivity improvements combined with cost-effective production increased our profitability in a manner that allowed us to clearly retain our position as the most profitable company in the industry. Net sales growth for the full year was 2.3%, operating profit was up by 4.9% compared to the previous year, and the operating margin was excellent at 22.3%. At the same time, cashflow was even better than last year, which further strengthened our already very good balance sheet.

Andrei Pantioukhov

MBA Andrei Pantioukhov currently serves as the interim President and CEO of Nokian Tyres starting 1 January 2017. He continues also in this role as Nokian Tyres’ General Manager, Russian operations. Mr. Andrei Pantioukhov has been in the Company since 2004, a member of the management since 2009 and Executive Vice President since the beginning of 2016.

The specialist in demanding conditions

Nokian Tyres is the world’s northernmost tyre manufacturer. It promotes and facilitates safe driving in demanding conditions. Whether driving through a winter storm or heavy summer rain, our tyres offer reliability, performance, and peace of mind. We are the only tyre manufacturer to focus on products for demanding conditions and customer requirements.

Innovative tyres for passenger cars, trucks, and heavy machinery are mainly marketed in areas with snow, forests and challenging driving conditions caused by varying seasons. We develop our products with the goals of sustainable safety and environmental friendliness throughout the product’s entire life cycle.

Nokian Hakkapeliitta has been the leading brand of winter tyres for more than 80 years. In the Nordic countries and Russia, market and price leadership derive from Nokian Tyres’ key sources of competitive advantage: an image of quality based on innovations, state-of-the-art technology, decades of customer experience, a strong distributor network and logistical expertise.

Central Europe and North America are also important market areas in which we are seeking profitable growth. We mainly sell our products in the aftermarket. Nokian Tyres group includes the Vianor tyre retail chain with wholesale and retail business in Nokian Tyres’ primary markets. Nokian Tyres has factories in Finland and Russia. In 2005–2016, we invested more than EUR 1 billion in our factories, whose productivity and product quality are top-notch in the industry.

In 2016, the company’s Net sales were approximately EUR 1,4 billion, and it employed 4,400 people at the end of year. Nokian Tyres’ stock is listed on the Nasdaq Helsinki.

Year 2016 in brief

Our flagship Hakkapeliitta

80 years.

New side wheelie world record

186,269 km/h

(115.742 mph)

Winter tyre share of sales

67%.

Nokian tyres were sold in

63

countries.

3,102

stores in Vianor, NAD and N-Tyre network.

More than
20,000

winter tyres are tested during the winter season.

400

yli

Our strategic focus

We have revised our strategy in 2015 to better support our goals on the way forward. The strategy guides the choices that we make. Based on our values and strategy, we have determined a set of business goals and Must-Wins – the development targets that we must overcome in the near future in order to advance on the path to profitable growth.

1

Demanding conditions

As the northernmost tyre manufacturer in the world and an expert in challenging conditions, we promote and facilitate safe transport. In freezing blizzards or heavy summer rain, our tyres offer reliability, performance and peace of mind. We are the only tyre manufacturer that focuses on products and customer needs for demanding conditions.

2

Innovative core competence

We are focusing our core competence on a narrow product line, the replacement markets and three business areas: 1) passenger car, SUV and van tyres; 2) heavy special tyres and 3) tyre and car servicing. We develop and manufacture premium tyres whose unique innovations provide added value in different applications from forestry work to safe driving on highways.

3

The most satisfied customers

We want the users of our products and services, as well as our dealers, to be the most satis ed customers in the tyre industry. A committed and extensive distribution network and effective logistics help us ensure the good availability of our products throughout the peak season. The Vianor chain spearheads our distribution channels and its direct contact with consumers provides us with valuable information about the needs and wishes of the end customers.

4

Select markets

We are focusing on regions where the driving conditions are demanding due to the changing seasons. Our core markets are the Nordic countries and Russia, where we are the market leader in premium tyres. Central Europe and North America are other key markets for us in terms of pro table growth. We sell most of our tyres in the replacement markets.

Product development and testing

Northern know-how

The relentless product development and versatile competence in testing create patented solutions that improve safety, driving comfort, and eco-friendliness.

Smart technology and bio-based materials

In the future, cars will be connected to a larger traffic system around them. The development of the Internet of Things can be seen in the interaction between cars and different systems. Sensor technology in the tyres will allow the driver to anticipate changes in the road surface and weather conditions 15–20 kilometers ahead. In practice, the cars’ computer systems could analyze this data faster and more comprehensively than the driver.

In the future, we could have eco-friendly tyres that are made with completely bio-based materials and equipped with sensor technology.

– Juha Pirhonen, Vice President of Research and Development

A forerunner in products and services

Unique stud technology

Nokian Hakkapeliitta 9 and Nokian Hakkapeliitta 9 SUV

The Nokian Hakkapeliitta 9 and Hakkapeliitta 9 SUV adapt to all forms of winter in a skillful and balanced manner. The patented, unique stud concept is at the heart of the new products. New Hakkapeliittas use two different types of stud. Operating with natural efficiency, the dedicated studs ensure easy and comfortable driving even on the worst of winter days.

First in the world

The SnapSkan service will promote traffic safety

The SnapSkan service informs the driver of the tread depth on their tyres and the correct time for tyre replacement. SnapSkan is based on state-of-the-art 3D scanning technology. It works quickly and serves drivers on daily routes.

The Nokian Hakkapeliitta R2 winter tyre receives

The Tire Technology of the Year 2016 award

Successful product development was recognized internationally when the new Nokian Hakkapeliitta R2 winter tyre won the esteemed Tire Technology of the Year 2016 award. The new Nokian Hakkapeliitta R2 is a genuine winter tyre designed for BMW’s i3 electric car, and it combines extremely low rolling resistance, first-class grip, and exceptional driving comfort.

Aramid Sidewall technology and new side wheelie world record 186,269 km/h (115.742 mph)

The new extreme world record was set when Nokian Tyres’ product development, Vianor’s professional pit crew, and stunt driver Vesa Kivimäki combined their strengths. The tyres on the record-breaking car had been reinforced with Aramid Sidewall technology. The secret behind Aramid Sidewall technology is the extremely strong aramid fiber that is also used in the aviation and defense industries. The technology is utilized in all of Nokian Tyres’ latest SUV tyres.

The Aramid fiber added to the sidewall rubber compound strengthens the sidewall and gives it substantially better tear strength.

– Matti Morri, Technical Customer Service Manager for Nokian Tyres

Services as part of a high-quality customer experience

Heidi found safe tyres and emergency assistance from Nokian Tyres

With the Hakka Guarantee, Heidi now feels safe when driving around Finland or even in Sweden, where the Hakka Guarantee also works. “When I feel that I have received good service, I will always tell my friends and acquaintances. If one of my friends were looking for new tyres, I would surely mention Hakka Guarantee.”